AU Small Finance and Ujjivan Small Finance banks offer 7% on savings accounts

The interest rates offered by small finance banks are now higher compared to private banks.

Amid falling interest rates, newer private banks and small finance banks offer higher interest rates as per data compiled by BankBazaar. DCB bank gives up to 6.75 percent. This is followed by RBL Bank offering up to 6.25 percent and Bandhan Bank at 6 percent.

The interest rates offered by small finance banks are now higher compared to private banks. For instance, AU Small Finance Bank, Equitas Small Finance Bank and Ujjivan Small Finance Bank are offering interest rates of up to 7 percent.

The interest rates offered by small finance banks on savings account are higher compared to leading private and large public sector banks. For instance, HDFC Bank, ICICI Bank and Axis Bank offer 3 percent to 3.5 percent interest. The Kotak Mahindra Bank is offering up to 4 percent interest. The State Bank of India (SBI) is offering 2.70 percent interest and Bank of Baroda is offering up to 3.20 percent interest respectively on their savings account.

Minimum balance requirements are higher

The minimum balance requirement in savings accounts of private banks starts from Rs 500 and it goes up to Rs 25,000. At AU Small Finance Bank and Suryoday Small Finance Bank the minimum balance requirement starts from Rs 2,000. It is kept higher by these banks compared to public sector banks because they are more interested in reaching out to the salaried middle class and self-employed professionals with their services. At DCB Bank, the minimum balance requirement is up to Rs 5,000. At a leading private bank i.e. HDFC Bank, the minimum balance requirement is Rs 2,500 to Rs 10,000.

Choose a bank with a long-term track record, good service standards, wide branch network and ATM services across cities; a higher interest on savings accounts would be a bonus.